Majority of investors ‘losing’ money

By Georgia Brown

08 August 2016

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Despite most property investors seeking out wealth and cash flow, a new report has revealed that over 60 per cent are making a loss on their rental properties.

CoreLogic recently released its Investor Report: A profile of residential property investment across Australia, which found that 61.9 per cent of residential property investors declared a net rental loss, according to ATO data.

When analysed across age cohorts, the report found that the majority of loss-making rental properties are owned by individuals who fall within younger age groups.

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A total of 78.4 per cent of property investors who declared a net rental loss were aged below 40, while 59.8 per cent of individuals aged 40 to 64 declared a loss.

The age group with the largest percentage of property investors claiming a net rental loss was the 25 to 29 cohort, with 82.8 per cent claiming a loss.

Only 22.5 per cent of those aged 65 years or older claimed a net rental loss.

The report suggests that the younger age cohorts would potentially include some first home buyers who are choosing to purchase as investors rather than owner-occupiers.

Meanwhile, 77.5 per cent of people above retirement age (65 years-plus) are claiming a net profit from their residential property investments, compared to just 33.1 per cent of individuals below retirement age.

The age group with the largest percentage of property investors claiming a net rental profit was the 75-and-over cohort, with 90 per cent claiming a profit.

“While younger owners of investment properties — those under 40 years of age — are the most likely to be claiming a net rental loss, the size of the average loss is greatest for those aged between 45 and 59 years of age,” the report said.

“The 25 to 29 year age group is the most likely to be claiming a net rental loss (82.8 per cent of individuals). However, the proportion of individuals claiming a net rental loss incrementally reduces across every age group thereafter, to a low of 10 per cent of individuals above 75 years of age.”